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Facts
The assessee, a co-operative credit society, filed its return of income declaring Nil income. The case was selected for scrutiny, and an ex-parte assessment order was passed due to the assessee's alleged non-receipt of notices and unawareness of proceedings. Additions were made for undisclosed income and disallowance of deduction u/s 80P.
Held
The Tribunal found it appropriate to remit the matter back to the Assessing Officer for fresh adjudication, considering the arguments from both parties. The assessee was directed to be diligent and cooperative in future proceedings.
Key Issues
Whether the CIT(A) erred in confirming additions and disallowances without proper opportunity or consideration of facts, and if the matter should be remanded for fresh adjudication.
Sections Cited
143(3), 69A, 80P, 234A, 234B, 270A, 271(1)(b), 271AAC, 144, 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1069653328(1), dated 14.10.2024, passed against the assessment order by Assessing Officer, Circle-3, Kalyan, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 10.12.2019, for Assessment Year 2017-18.
Grounds taken by the assessee are reproduced as under:
“Ground No. 1 - Lack of Adequate opportunity of being heard. 1.1. On the facts and in the circumstances of the case and in law, Hon'ble Commissioner of Income-tax (Appeals) has passed an order in breach of the principles of natural justice as CIT(A) has ignored the submission of the Appellant filed on 13th March 2024, 13th May 2024, 12th and 18th July 2024 and also on 14th October 2024 wherein the Appellant has time and again requested for opportunity to provide additional details as CIT(A) may require and also for personal hearing. 1.2. The Learned Assessing Officer ('Learned AO') has arrived on conclusion therein based on incorrect factual understanding and therefore, the said impugned order, being bad in law is liable to be quashed or alternatively set aside.
2. Ground No. 2- Erroneous determination of income 2.1 On the facts and in the circumstances of the case and in law, the CIT(A) has erred in confirming the income determined by the Learned AO without getting into the facts of the case. Thus, the additions confirmed by CIT(A) ought to be quashed.
3. Ground No. 3 - Provisions of Section 69A of the Act are not applicable 3.1 On the facts and in the circumstances of the case and in law, the CIT(A) has erred in accepting the Learned Assessing Officer's action for invoking the provisions of Section 69A of the Act by ignoring the material available on record. Thus, the impugned order is liable to be reversed.
4. Ground No. 4- Deduction of Section 80P of the Act incorrectly disallowed 4.1 Without appreciating the facts of the case, the CIT(A) has erred in confirming the disallowance of deduction under section 80P of the Act claimed by the Assessee. Thus, the same must be rightfully allowed to the Assessee.
5. Ground No. 5 - Incorrect levy of interest 5.1 On the facts and in the circumstances of the case and in law, CIT(A) has incorrectly confirmed the levy of interest under section 234A and 234B of the Act. Thus, the said addition of interest being unjustified, ought to be deleted.
Ground No. 6 - Initiation of the penalty proceedings 6.1. On the facts and in the circumstances of the case and in law, CIT(A) has incorrectly confirmed the initiation of penalty proceedings under section 270A, 271(1)(b) & 271AAC of the Act.”
Brief facts as culled out from records are that assessee is an Urban Co-operative credit society formed as an Association of persons (AOP). Assessee is engaged in business of accepting deposits and providing credit facility to its members. It carries out this activity in its normal course of business and after collecting the deposits from its customers assessee deposits the same funds in its bank accounts. Assessee has filed its return of income on 31.01.2018, reporting a total income at Rs. Nil. The case was selected for scrutiny through CASS. Accordingly, notices u/s 143(2) was issued on assessee on 21.09.2018 through email. Assessee was not in receipt of any notice through post and was unaware of the proceedings initiated against it. Ld. Assessing Officer passed an ex-parte order u/s.144 since the assessee was unaware of the ongoing assessment proceedings as the email address on which the ld. Assessing Officer issued the notices belonged to an ex-employee of the assessee. Ld. Assessing Officer in his order made an addition of cash deposited during demonetization period to the tune of Rs.50,29,344/- as undisclosed income u/s.69A of the Act and also disallowed the deduction of gross total income of Rs.7,03,130/- u/s. 80P of the Act. Aggrieved, assessee went in appeal before the ld. CIT(A)
3.1. Ld. CIT(A), after examining the submissions filed by the assessee and the detailed observations made in the assessment order, observed that assessee, in its appeal has not controverted the specific observations of the Ld. Assessing Officer. Assessee did not file any reply to the notice nor did it make appearance before the Ld. Assessing Officer. In the appeal, assessee submitted that it was not in receipt of any notice through post and was unaware of the proceedings initiated against it. Ld. CIT(A) did not accept this argument of the assessee because on the one hand assessee is giving an impression that they are very diligent by collecting and depositing all the cash received from its members within four days and on the other hand for months it failed to take control of its log-in details of the income tax portals and the notices which were issued. As per ld. CIT(A), assessee has also not produced any evidence as to what action it has taken against its internal auditor who was responsible for it. Also, assessee in its appeal before ld. CIT(A) did not specifically challenge the findings of the ld. Assessing Officer, regarding validity of notices and whether assessee could have legally accepted such deposits from its members. According to ld. CIT(A), the credit co- operative societies are not permitted to collect the demonetised currency of Rs. 500/Rs. 1000 in lieu of any transactions and therefore, even if it is assumed without accepting that such transactions happened, it were contrary to law and were prohibited. Thus, ld. CIT(A) dismissed the appeal by the assessee. Aggrieved, assessee is in appeal before the Tribunal.
Before us, Ld. Counsel for the assessee pleaded to provide one opportunity to make all the required submissions and explanations by remitting the matter. He gave an assurance to the Bench that if the matter is so remitted, all the efforts shall be made to comply with the notices of the hearing as and when fixed.
Per contra, Ld. DR though objecting on the plea of the Ld. Counsel fairly submitted that since nothing has been furnished at the stage of assessment as well as first appeal, the matter may be remitted back to the file of the Ld. Assessing Officer which would avoid multiplicity of proceedings before the Ld. CIT(A) of calling remand report.
Having heard both the parties, we, by taking into consideration the support given by the Ld. Sr. DR to the plea made by the Ld. Counsel, find it appropriate to remit the matter back to the file of the Ld. Assessing Officer for denovo meritorious adjudication. By taking note of the conduct of the assessee at all the stages of the proceedings before the authorities below, we are compelled to direct the assessee to be diligent and cooperative in attending the hearings and make submissions for expeditious and effective disposal. The assessee should not seek adjournments unless warranted by compelling reasons.
Since the matter is restored to the file of Ld. Assessing Officer for meritorious adjudication by passing a speaking order in terms of our observations made hereinabove, we are not expressing any views on the merits of the case so as to limit the assessment procedure before the Ld. Assessing Officer. The observations herein made by us in remanding the matter back to the file of Ld. Assessing Officer will not impair or injure the case of the Revenue nor will it cause any prejudice to the defense/explanation of the assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 30 April, 2025.